Opinions still vary as to whether pricing increases are uniform across all lines and whether these increases are enough to declare that a hard market has arrived. But more executives and industry observers appear willing to lean in that direction now compared to comments made after Q4 2011 results were released.
Following are observations from industry leaders made during conference calls and in recent analyses in response to 2012 first-quarter results.
• Ken A. Crerar, president and CEO of the Council of Insurance Agents and Brokers, made perhaps the most definitive statement regarding the state of the market, stating that the market has made a hard turn.
“We've been cautious up to now about declaring a market turn, but I think it's reasonable to say that the market has made a hard turn after two quarters of price increases and tighter underwriting,” says Crerar. “It's difficult to predict length and severity, but the market has turned.”
• Crerar's outlook is in line with observations made by W.R. Berkley Corp. CEO William R. Berkley, who said in a first-quarter conference call that a turn toward a hard-market cycle is now more visible. But Berkley added that such a turn could spell trouble for insurance companies that will be “stupid” and not increase rates.
In a first-quarter conference call, Crowley said Markel has heard from its agents that “some carriers are raising rates substantially [at renewal], and yet they are being very competitive on new business—not following the same [underwriting] philosophy.”
Markel's executives say positive rate increases are spotty, depending on the line.
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